Editorial of the Socialist

Economic crisis in 'them and us' Britain

Wages fall: Office for National Statistics 2010 survey of hours and earnings

For a few at the top, Britain is still booming. In 2010, while the majority suffered the biggest squeeze on their incomes since 1977, the earnings of FTSE 100 chief executives rose by 32%.

The number of billionaires increased from 53 to 73. For the working class, by contrast, the economic crisis which began in 2007 has intensified a long-term trend for its share of the wealth to decrease.

The TUC has produced a report exposing the myth that living standards for the majority were increasing during the boom. On the contrary, the report shows that low-paid workers' incomes have fallen in real terms over the last 30 years.

The number of workers whose wages are at least a third less than median pay has soared from 12% in 1977 to 22% in 2009. Since 2007, as unemployment has rocketed and wages have been squeezed, poverty has increased dramatically.

In March this year the BBC Panorama programme carried out a survey of actual take-home pay. This showed that, on average, workers are taking home £1,088 less a year than two years ago when the sum is adjusted for inflation.

Their real pay has fallen by 5% since the beginning of 2009, which was half way through the recession. Nor is there any prospect of strong growth for Britain's economy, on the contrary stagnation is the rosiest scenario on offer.

As the weak growth in the US stutters, the IMF has also downgraded its growth predictions for Britain this year to just 1.5%, warning that there are significant risks of inflation, low growth and unemployment.

Nonetheless, the IMF has thrown some crumbs of comfort to chancellor George Osborne by backing the government's determination to forge ahead with the biggest cuts to public spending in 80 years.

This is the IMF whose policies have failed in Greece and whose structural adjustment programmes have caused untold misery to workers and poor people across the world.

The IMF's commendation is not, however, the unified position of the strategists of capitalism. The OECD has warned that if Britain's growth is lower 'than expected', as the OECD itself now predicts, the pace of the cuts should be reconsidered.

A number of capitalist economists, including some who wrote to the press supporting the government's strategy just a year ago, are now urging the government to rethink.

For example, Jonathan Portes, the director of the National Institute of Economic and Social Research, who until February was chief economist at the Cabinet Office advising the prime minister, said: "You do not gain credibility by sticking to a strategy that isn't working."

However, these commentators do not have a solution. Like Eds Miliband and Balls they are only arguing for the pain to be less deep but more prolonged.

Nonetheless Osborne's cuts will massively exacerbate the problems. George Osborne has attempted to brush off the criticism and to continue to insist that he 'has no plan B'; however, the disastrous results of 'Plan A' are still to be played out.

The government's savage cuts are only beginning to be implemented. As more public sector workers are thrown on the scrapheap, and other cuts hit the public and private sectors, tax revenue will decrease and benefit claims, measly as payments are, will spiral.

The result will be enormous human misery and could even mean an increase rather than a decrease in the government deficit. There is no prospect of 'rebalancing' Britain's economy, of the puny manufacturing sector compensating for the cuts in public spending.

On the contrary, manufacturing is already suffering as consumer spending falls. It is already 2.1% lower than at this time last year, and is likely to fall further.

Production for need

The Con-Dem government can be forced to retreat from its plans. It has already been shaken by the TUC demonstration on 26 March - the biggest trade union demonstration in Britain's history.

On 30 June the government is likely to face the first coordinated strike against its policies by several trade unions. This has to be a step towards a one-day strike of the whole public sector.

This would terrify the government and give enormous confidence to the working class. At the same time a socialist alternative to the capitalist system needs to be put forward.

Capitalism is a blind system, based on the drive for short term profit. It is also in fundamental crisis.

The Socialist Party calls for the nationalisation of the big banking and finance companies. Compensation should be paid on the basis of proven need - without one penny going to the rich speculators who are demanding that the working class pay for the crisis for which they, the speculators, bear responsibility.

It would then be necessary to introduce a state monopoly of foreign trade - so that it would be a democratically elected government - not the market - controlling imports and exports, including capital.

A socialist nationalised banking sector would be democratically run by representatives of banking workers and trade unions, the wider working class, as well as the government.

Decisions would be made to meet the needs of the majority, for example offering cheap loans and mortgages for housing and for the planned development of industry and services and ending all repossessions of people's homes.

However, that would only be the start. The capitalist crisis has led to enormous economic destruction.

In Britain around 10% of wealth has already been lost as a result of the recession, due to factories and workplaces closing, resulting in 2.5 million, and rising, officially unemployed.

That is why a crucial step towards solving the economic crisis would be to also take all the big corporations that dominate Britain's economy into democratic public ownership.

This would then allow for production to be planned to meet the needs of all people and the planet and not for private profit.